Of interest to option writers

AbbVie Inc. Analyst Recommendations

AbbVie Inc. (symbol ABBV) now trading at $77.58, is paying the highest option premiums in a long time. (ABBV C 01NOV19 78.00 US, that is, expiry date Nov. 1, strike price $78.00)

ABBV stock has recovered from its 52 week low of $62.66. It is a much safer buy today than when I originally bought it about a year ago at over $120!

The bid/ask range is $1.18/$1.21 or 1.53% per week!

Normally, I confine my security holdings for options selling to 5% of my stock market investments…

… unless I see a mispricing opportunity.

I think that at current premium levels on ABBV, we have such an opportunity. I just positioned my securities holdings on ABBV to equal 22% of my portfolios and sold ABBV C 01NOV19 78.00 US.

A recent paper we reviewed concludes with: “…that including options in the portfolio most often results in underperformance relative to the benchmark portfolio.”

Note that the paper states “…most often…” suggesting that there are exceptions. This could well be one of them.

Please note that the Monday Morning Millionaire Program contains opinions only. It does not provide any investment advice or endorsements.

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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